Analysis: Four secrets of customer experience success

It is a phenomenon that has been dubbed ‘peak stuff’ by an Ikea director, and a trend that is prompting retailers to re-evaluate their offers and their stores.

Next chief executive Lord Wolfson has frequently highlighted what he termed a sectoral shift of a “continuing trend towards spending on experiences away from ’things’”.

And last week Marks & Spencer pointed out in its results that the clothing market had shrunk by 1.8% over the year “with competition for consumer spending from other discretionary products and services such as leisure and entertainment”.

Although the change in consumption habits seems to be more pronounced at present, it has been going on for a long time, as shown in a study by Retail Economics and Squire Patton Boggs.

“Ikea has redefined the notion of showrooming. The large format stores encourage shoppers to meander through a variety of home furnishing exhibitions, providing an immersive shopping environment which showcases aspirational design in a comfortable and relaxed environment”

Richard Lim, Retail Economics

Their new report, The retail experience economy: the behavioural revolution, highlights ONS data showing that retail as a proportion of consumer spending has fallen over decades.

In 1963, the proportion was 29.5%. In 2016 it had dropped to 24.2% and in 2028 it is forecast to be 20.2%.

At the same time spending on recreation and culture, and communications, has risen.

So no wonder retailers such as Debenhams, House of Fraser and John Lewis among others are reinventing themselves to offer customers experiences that they value as well as their traditional ranges.

But what makes a great retail experience? Research by Retail Economics conducted with 2,000 consumers pinpointed four key factors: environment, escapism, entertainment and education.

Environment

The study found that 43% of shoppers said they were likely to spend more money in the future with retailers that offer a “meaningful” in-store experience.

Nearly two-thirds were more willing to shop at places with social spaces such as restaurants and cafés.

Retail Economics chief executive Richard Lim says Ikea is a great example of an immersive retail experience.

He says: “Ikea has redefined the notion of showrooming. The large format stores encourage shoppers to meander through a variety of home furnishing exhibitions, providing an immersive shopping environment which showcases aspirational design in a comfortable and relaxed environment.

“Shoppers are encouraged to stretch out on beds and test out furniture while the world-famous Swedish meatballs create another reason to shop longer.”

Escapism

Enabling people to leave behind everyday routine can be “an easy win” for retailers, according to the study. Those aged between 35 and 44, and 55 and older, placed the greatest importance on escapism.

Lim offers Late Night Chameleon Café (LN-CC) in Dalston, east London, as an escapist environment.

He says: “The in-store experience is built around a central tunnel with individual rooms off to each side. Luxury apparel from aspiring designers simulate art installations alongside a library of rare vinyl and books.”

Entertainment

From live-streaming to book signings and fashion shows, entertainment is central to providing an absorbing experience and particularly valued by younger consumers.

For inspiration, see the Lego store in London’s Leicester Square, says Lim.

He observes: “The store puts entertainment at the heart of the in-store experience.

“The store’s Brick Specialists encourage shoppers of all ages to play and ‘build by your own rules’.

“Their digital box enables consumers to see the models come to life in 3D while the Lego Mosaic Maker captures your image and, in under 10 minutes, you will receive printed instructions and the bricks required to complete the Lego portrait.”

Education

Especially valued by older consumers, education is more specific to particular retail categories than other characteristics of retail experience.

The report states that educational experiences are “more likely to occur when products are complex to understand, high value or if they need a level of skill or expertise to implement.

“In many cases, educational experiences will be supported by in-store personnel that have good technical knowledge and increasingly by online video content, chatbots or online support.”

Lim says: “Mamas and Papas’ ‘Parents to Be” events are a prime example of a retailer who understands its customers’ lifecycle.

“The events provide an educational experience for expectant parents who are looking for more active participation throughout the customer journey by receiving advice, guidance and demonstrations on safety, nutrition and even first aid.”